Alcohol and other drug (AOD) use disorders are chronic conditions with high costs to individuals, society, and the health care system. At the same time, care for patients with these disorders can be difficult to access, uncoordinated, and not evidence-based. The Affordable Care Act (ACA) presents an enormous opportunity for AOD treatment through expansion of insurance coverage to populations that disproportionately include individuals with AOD use disorders, the scope of AOD treatment benefits, and delivery system reforms. The ACA and many states' health care reforms also foster the implementation of new ways to pay health care providers in order to drive delivery system innovations and improvements in patients' health and health care. Bundled payments, a predetermined fee or budget that includes the prices of a group of services that would typically treat an episode of care in a defined period of time, are considered one of the most promising new payment models. Under bundled payments, providers are more responsible for patients' clinical management and costs, which may affect organizational revenue and organizational behavioral responses (e.g., access to care, number of services provided). Bundled payments are associated with reductions in health care spending and utilization and may improve care coordination and the implementation of evidence-based practices. However, bundled payments have not yet been developed for AOD treatment. This application proposes a study to design and simulate the impact of bundled payments for alcohol treatment to understand which bundled payments are effective and feasible to implement to pay for episodes of care experienced by individuals with alcohol use disorders. This study uses an exploratory sequential mixed- methods design to (1) obtain input from AOD treatment organizations' on design of episodes of care and bundled payments, (2) design alcohol bundled payments using organizational input and heath care claims and administrative data, and (3) predict the impact of alcohol bundled payments on organizational revenues and organizational behavioral responses. The data sources for this project are group interviews with financial, clinical, and executive leaders at AOD treatment organizations and 2010-2013 Medicaid claims and administrative data. Bundled payments for alcohol treatment have the potential to improve care coordination, implementation of evidence-based practices, and engagement in outpatient treatment; reduce readmissions to detox; make care more patient-centered; and cover treatment services that are not traditionally reimbursed. The results of this study will illustrate the feasibility and effectiveness of bundled payments for alcohol treatment. The bundled payments designed in this project are the first for alcohol treatment and have the potential to be used in health care practice and in further research to improve the health and health care of individuals with alcohol use disorders.